What are the predicted impacts of the new cigarette tax regime?

The new tax regime is predicted to significantly boost illicit cigarette trade and consumption, reduce FCV crop offtake, and cause substantial job losses in farming and related activities.

How will the cigarette tax hike affect tobacco farmers?

Tobacco cultivators and agricultural laborers are expected to face substantial job losses, with an estimated reduction of 2.6 million man-days of employment in farming and affiliated activities.

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Cigarette Tax Hike Sparks Smuggling Fears

Q: What is the projected increase in illicit cigarette consumption?

Rising cigarette prices are expected to push up demand for illegal tobacco products by nearly 39 percent, leading to increased illicit consumption.

4 Feb

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Summary

New excise duty may significantly boost illicit cigarette trade.
Tobacco cultivators and farm workers face substantial job losses.
Illicit cigarette consumption could surge by 39 percent.

Cigarette Tax Hike Sparks Smuggling Fears

Additional excise duty and a health cess implemented on February 1 have led to a sharp increase in cigarette prices. This move is anticipated to significantly boost the illicit cigarette trade, which is already thriving due to tax arbitrage.

The report projects a substantial negative impact on the tobacco value chain and the broader economy. Specifically, it estimates a nearly 20 percent reduction in Flue-Cured Virginia (FCV) crop offtake. This is expected to cause approximately 2.6 million man-days of employment loss in farming and related activities.

This development poses a significant challenge for FCV tobacco cultivators and agricultural laborers, especially women, and those in associated industries. The rise in cigarette prices is estimated to increase the demand for illegal tobacco products by nearly 39 percent, leading to an increase in illicit consumption.